Equity Release can be utilised as a long-term financial vehicle. It may be able to unlock cash tied to your property. On occasion, you may already have a plan for utilising the fund. If you have taken out a lifetime mortgage, it may free up some of the home’s value. It may come back to you as cash. It is possible to obtain equity release in Lincoln in lump-sum or instalment payments. You can use the money however you like.
Questions You May Have About Equity Release
What Happens to Your Equity Release Plan After You Pass Away?
If you die suddenly, your estate executor may sell the home, and some portion of the proceeds may be used to repay the equity release plan. Lifetime mortgage options are popular because they are usually repaid upon death. It can be done either by selling the property or by using the funds available.
If the net estate is distributed to the beneficiaries in accordance with the will and they decide to keep it, they may have to repay the lender under a buy-to-let mortgage.
What is Inheritance Protection?
You can utilise the equity release plan to decrease the inheritance amount. It may help protect property value. In addition, it ensures that your family inherit the property without any hassle. Therefore, it is also referred to as an insurance protection guarantee.
If you keep this option in your lifetime mortgage, it may allow you to ringfence a portion of the property value. To secure the larger amount, you must lower the amount that can be released from the home. For example, if they decide to protect 20% of the maximum available amount, you should choose an equity release plan that may be about 20% lower.
How Equity Release May Impact the Inheritance Tax?
Releasing the home’s equity may reduce the estate value. On occasion, beneficiaries may have to pay a lower amount of inheritance tax. Proper planning may even allow the estate value to go below even the IHT threshold.
However, it is worth noting that the main residence usually comes with an additional IHT allowance. It is possible to notice a fixed amount with a nil band added. It means that a couple may even have to leave their family home behind before IHT becomes payable.
However, the extra nil band may not be applied to the equity released from the property when you have not spent the money. When it may remain part of your property, it may become part of IHT in due course.
Is It Possible to Utilise Equity Release for Gifting?
Careful planning is necessary when you are trying to gift the equity release funds. It can be considered a Potentially Exempt Transfer. If you lived for about 7 years after making the gift, the money acquired may be exempt from IHT. If you pass away before the 7-year mark, the amount may be included in your estate. It may also be subject to the IHT.
To know more about the equity release in Lincoln, you must get in touch with the experts from Canon Independent Mortgage Services.